Debt supercommittee members brace for failure

November 20, 2011

The congressional “supercommittee” stumbled its way toward failure Sunday, with final staff-level discussions focusing mostly on how the panel should publicly admit that lawmakers could not meet their mandate of shaving $1.2 trillion from the federal debt.

Rather than making a final effort at compromise, members of the special deficit-reduction committee spent their final hours casting blame and pointing fingers, bracing for the reaction from financial markets that are already jittery over the European debt crisis.

(Paul Kane live chatted with readers Monday about the reasons behind the supercommittee’s failure. Read the transcript. )

Half of the 12 lawmakers turned to the Sunday political news shows as their outlet, speaking of their effort in the past tense and accusing the other side of intransigence that they blamed for the failure to clinch a deal. There were no last-minute negotiations, no behind-closed-doors huddles, just a near-empty Capitol in which senior aides could not agree on how to formally shutter the panel by Monday night.

The only face-to-face meetings for members of the supercommittee came in the green rooms of the talk shows. On NBC’s “Meet the Press,” Sen. Jon Kyl (R-Ariz.) blamed the committee’s failure on Democratic reluctance to cut into popular programs such as Social Security and Medicare. “Our Democratic friends were never able to do the entitlement reforms,” Kyl said, arguing that Democrats were the roadblock to a deal. “They weren’t going to do anything without raising taxes.”

Calling Kyl’s remarks “patently not true,” Sen. John F. Kerry (D-Mass.) accused Republicans of blocking the committee’s work by demanding an extension of George W. Bush-era tax cuts and refusing to consider significant tax increases on wealthier people. “We didn’t come here to do another tax cut to the wealthiest people while we’re [asking] fixed-income seniors to ante up more, people on Medicaid who are poor to ante up more,” he said.

Barring a last-second breakthrough, the law calls for a punitive set of $1.2 trillion in automatic spending cuts to kick in at the start of 2013, with half coming from national security budgets. Kyl and other lawmakers have embraced reconfiguring the automatic cuts to save the Pentagon from such steep cuts, but any movement that decreases the overall savings runs the risk of causing financial ratings agencies to downgrade the U.S. Treasury’s debt.

Senior staff members ran a last round of checks Sunday to make sure there wasn’t some final give from the other side. There wasn’t. Aides left the Capitol on Sunday evening with no clear path for shutting down the panel, which, under the committee’s rules, needed to unveil legislation before midnight Monday.

Republicans prefer releasing a joint statement from the co-chairmen, Rep. Jeb Hensarling (R-Tex.) and Sen. Patty Murray (D-Wash.), after the markets close Monday, fearing that formally ending their effort could set off a market re­action. Democrats were considering pushing for a brief public statement from the co-chairmen.

Almost every congressman has left Washington for the week-long Thanksgiving break, so the legislative reaction to the committee’s failure will not come until early next month. The impasse leaves a host of other must-pass items, such as extensions for unemployment insurance and the payroll tax holiday, without any vehicle for passage before year’s end.

Despite a national debt that topped $15 trillion last week, the two sides could not bridge the taxes-vs.-entitlement divide. The GOP’s passion for keeping tax rates as low as possible meant the panel’s Republicans demanded steep entitlement cuts for small-to-modest increases in tax revenue, and the Democrats fiercely guarded entitlement programs unless the Republicans gave in on higher taxes.

It was the same stumbling block that prevented President Obama and House Speaker John A. Boehner (R-Ohio) from reaching the “grand bargain” they negotiated over the summer, an effort to trim $4 trillion from future borrowing by the Treasury.

The Obama-Boehner negotiation ended with an agreement on more than $900 billion in spending cuts to federal agency budgets over the next decade while creating the Joint Select Committee on Deficit Reduction — tasked with finding at least $1.2 trillion more in savings and voting out a plan before Thanksgiving.

The panel of six Democrats and six Republicans, granted extraordinary fast-track powers, began convening in early September with a series of hearings and closed-door meetings. The group, however, has broken down in the past month into a series of small huddles, with a handful of lawmakers working to hit their minimum target of $1.2 trillion and others working on a smaller backup plan that would cushion the blow from the automatic spending cuts.

Neither Hensarling nor Murray formally admitted that the panel was hopelessly gridlocked, but each suggested a new effort was needed in the very near term to fix the government’s balance sheet.

“It wasn’t so much of a failure as it was a failure to seize an opportunity. . . . This nation better seize another one or we will be in big economic trouble,” Hensarling said on “Fox News Sunday.”

“I believe strongly that we still have the capability to come together to solve this problem,” Murray said on CNN”s “State of the Union. “If the supercommittee can’t do it, then I hope that Congress will. In fact, I’m committed to solving this. You can’t just ignore this crisis.”

The trigger of automatic cuts should assuage jittery financial markets, which have been on a roller-coaster ride since the summer’s debt standoff in the United States and the struggle to tame even greater fiscal quagmires in Europe. But lawmakers fear that the sentiment of a dysfunctional federal government could solidify and prompt new fear in the global markets.

After the summer-long battle over lifting the debt ceiling, Standard & Poor’s downgraded U.S. debt based on “America’s governance and policymaking becoming less stable, less effective.” The supercommittee gridlock came despite its unprecedented parliamentary power — any plan winning at least seven votes would have been guaranteed a straight up-or-down vote in the House and Senate before Christmas.

“There is a real threat that not only will there be a downgrade,” Kerry said, “but that the market on Monday will look at Washington and say, ‘You guys can’t get the job done.’ And just the political confusion and gridlock is enough to say to the world: America can’t get its act together.”

Staff writers David A. Fahrenthold and Felicia Sonmez contributed to this report.

Paul Kane covers Congress and politics for the Washington Post.
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